Claude Solnik, The Daily Record Newswire
Remember that lengthy notice you got from your bank describing its policies on protecting and sharing your data?
No?
Well, you almost certainly got one. But you’re not alone in not having read it.
The law requires banks to mail privacy notices — long explanations of how they protect or share consumer information — annually to every customer. Chances are good you’ve received many of them, and never noticed.
Because of this unfortunate truism, banks have long urged regulators to give them relief from the mandate that they mail these policies, which are expensive to send and almost universally treated as junk mail. Now, relief may finally be in sight.
Instead of mailing reams of unwanted information to every customer, banks may soon be able to take a greener and financially leaner approach by simply posting their protect/share policies online. After all those years of banks’ pleas falling on deaf ears, banks have found an ally in an unlikely place — an agency created specifically to protect consumers’ rights.
On May 6, the Consumer Finance Protection Bureau issued a proposal that would let institutions that meet certain qualifications post their policies online, rather than mailing them out. According to CFPB Director Richard Cordray, consumers need clear information — but that doesn’t necessarily mean it has to come in an envelope.
“This proposal would make it easier for consumers to find and access privacy policies, while also making it cheaper for industry to provide disclosures,” Cordray said in a written statement.
Washington-based Independent Community Bankers of America, which has long sought to end the mailing mandate by Congressional action, said it supports the CFBP’s proposal, though some slight alterations might be required.
“The redundant and confusing notices provide no useful information to customers and are a needless paperwork expense for community banks,” ICBA CEO Camden Fine said in written statement.
The ICBA agrees the Internet is a more efficient way to provide information. A few language changes would be required to make the policies clearer to laymen, according to Fine, but otherwise posting the protect/share policies online would provide ease of access and make the details perpetually available to customers who want them.
Lilly Thomas, ICBA president and regulatory counsel, agreed that expense and increasing the informational benefit for customers are two good reasons to make the digital switch. The CFPB estimates financial institutions could save about $17 million annually by publishing the policies online.
“The big reason they should change is a lot of annual privacy notices, especially for community banks, are costly and don’t seem to give a whole lot of benefit to customers who receive them,” Thomas said.
Many bankers eagerly agree.
“I think if we post it on our website, that would be fine,” said Michael Vittorio, CEO of First National Bank of Long Island. “For the expense that’s created, you need some real value created in the paper disclosures. I don’t think enough value is being created.”
Other banks, however, see less of a benefit, since they share certain data in ways that would still require them to mail notices.
“These changes have no effect on us,” said Marc Piro, a spokesman for Wayne, N.J.-based Valley National Bank, which has 14 branches in Nassau and Suffolk. “We’d still have to mail it out, because we do share certain information with subsidiaries and affiliates.”
Valley National, in fact, already posts its policies online, in addition to mailing out notices even Piro admits are “throw-away pieces.”
“But we do everything we can to comply with the regulations,” the spokesman said.
And institutions would still be required to inform customers by mail that protect/share policies are available online, though that might not require a separate mailing and could be sent as part of other mailed notices, such as bank statements.
